Luxury brands underinvest in Russia

19 August 2013

MOSCOW: Luxury brands have established a presence in Russia but are failing in their digital communications, frequently lacking a Russian-language website and a social media presence and with a mobile offer incompatible with local devices, new research has said.

L2, the think tank, analysed the digital performance of 84 global and local prestige brands in Russia for its report, Digital IQ Index: Russia. Brands were ranked on website effectiveness (30%), social media (30%), digital marketing (20%) and mobile (20%).

It found that just 14% of luxury brands had a Russian-language website, compared to 45% with a global website in English. But only around 5% of the Russian population is proficient in English.

Successful digital investment, argued L2, required a local approach. It pointed to the importance of Yandex as a search engine, the popularity of domestic social networks and the continued use of feature phones.

"In Russia, leading global brands consistently underinvest in language optimization, prove absent from local social platforms, and copy Western mobile investments despite a different device mix found on the ground, all of which significantly handicaps the majority of prestige brands examined," Leeza Kuznetsova, research lead at L2, the US think tank, explained to Luxury Daily.

She advised the prioritisation of social media investment on VK, with three times as many users as Facebook, and added that brands operating directly in Russia, rather than through a franchise partner, performed best in digital.

The most highly rated luxury brands in the survey were Estée Lauder, Dolce & Gabbana, Louis Vuitton and Chanel. But overall, 71% of the brands reviewed by L2 were rated as "feeble" in their digital offer.

The report also noted that most luxury purchases by Russians took place abroad, partly because of infrastructure issues and partly because of a fear of counterfeits – up to 30% of goods sold in some sectors, such as apparel and cosmetics, are fake.

Kuznetsova suggested that having a local site could help in this regard. "Without a direct presence, brands that operate from the periphery face increased competition from unofficial channels," she said.